States now have power to allow e-signatures on odometer disclosures

Dealerships could be inching closer to all electronic documents, thanks to a bill signed into federal law this month.

President Barack Obama signed the Fixing America’s Surface Transportation (FAST) Act, into law Dec. 4. Before the bill, the federal government required wet signatures on odometer disclosures. Now, states can decide whether or not to allow electronic signatures on odometer forms, which could speed up the F&I process and reduce errors and fraud.

The odometer disclosure was the last vehicle sales document on which the federal government required a wet signature, although some states may still require it, said John Brueggeman, executive vice president of Motor Vehicle Software Corp. in California and a former Montana senator.

“The fact that vehicle sales are still stuck in the paper era is crazy,” he said. “The next phase will be working with states to allow e-signatures on these documents.”

In California, Brian Maas, president of the California New Car Dealers Association, said he plans to discuss the move to e-odometer disclosures with the state DMV in the next 30 to 60 days.

“I suspect my colleagues [in other states] will have the same conversations,” he said.

Odometer disclosures and other state forms are typically filled out and signed in the F&I office with the bulk of a customer’s paperwork, Maas said.

The change won’t happen overnight, Maas said, but it is one step to make the car-buying process faster.

“Dealers have been trying to make the sales process more efficient. Having a wet signature required by the federal government was a potential hindrance to that effort,” he said.

Handwritten signatures tend to add to time in the F&I office, Brueggeman said. “Dealerships should have more time to deal with high-value things like selling service contracts or other F&I products.”

Paper documents are also more error-prone, he said. “But when you’re moving to electronic, you have field validation.”

And, he added, “You can much more clearly track, audit and investigate fraud through a digital gateway.”

NHTSA holdup

The National Highway Traffic Safety Administration said it would offer guidance on electronic odometer disclosures by Jan.1, 2014, but two years later, it still hasn’t released national guidance.

“We’ve been waiting for NHTSA to make a move,” but the agency has been tied up with issues like extensive recalls, Maas said.

Many dealers have been ready to use electronic odometer disclosures for a while, Maas added.

“This has been our radar for a long time.”